Miranda Mulholland for Great Lake Swimmers by Brenda Lee (CC BY 2.0) https://flic.kr/p/7zTo1U

Miranda Mulholland for Great Lake Swimmers by Brenda Lee (CC BY 2.0) https://flic.kr/p/7zTo1U


Music Industry’s Canadian Copyright Reform Goal: “End Tech Companies’ Safe Harbours”

Miranda Mulholland, a Toronto-based musician and music label owner, delivered an exceptionally passionate, accessible, and deeply personal keynote speech last week to the Economic Club of Canada. Mulholland’s talk was notable not only for providing an artist’s perspective, but for coming ready with next steps for everyone. She urged artists to create and protect their intellectual property, consumers to create playlists, write reviews, go to shows, and subscribe to digital music services, the music industry to be upfront about payment, to better support artists (including providing daycare services), and to pay for tickets to their own artists (Kate Taylor offered her take on the talk here, which includes an incredible comment from Music Canada that it wants only a level playing field, not public money. Music Canada has spent the last few years successfully lobbying for tens of millions in taxpayer support from provincial governments).

Given the active support from Music Canada for the event, her recommendations for policy makers were a core part of her message and largely mirror those of the industry. Unlike the 2010-2012 copyright reform process, piracy is no longer a key issue. Indeed, the issue of peer-to-peer file sharing and unauthorized downloading was not even mentioned in the speech. With the Canadian digital music market enjoying remarkable growth – Canada leaped ahead of Australia last year to become the 6th largest music market in the world and SOCAN generated record revenues – the industry focus is no longer on whether the public is paying for music (they are) but whether they are paying enough.

Mulholland is at her strongest when she raises clearly personal policy issues. For example, she cites a single performance payment for music without any royalties that is replayed regularly on the television show Republic of Doyle, making a compelling case for reform. She is weaker when she mirrors the industry line about the need to eliminate intermediary safe harbours in the hope of forcing Google to increase royalty payments for Youtube music streaming. Mulholland has an exceptional presence and is a talented musician, but her music videos on Youtube have generated at most a few thousand views and claims about low royalties do not ring true. To be clear, the number of Youtube views says absolutely nothing about Mulholland as an artist, but it is relevant with respect to royalty payments.

According to Mulholland (and the industry), the government should “end tech company safe harbours”. The goal is clear: by making Google liable for any content available on its site, the government will force the company to police its content, permanently remove anything that is alleged to infringe, and ultimately pay more for licences. The legislative demand is framed as fixing a mistake from the 1990s, where Mulholland (and before her Music Canada’s Graham Henderson) claim that artists were promised success in the digital age and instead found that only new Internet intermediaries benefited from the online environment.

Mulholland comes across as a thoughtful and engaged person, but she is wrong about the development of Canadian copyright and safe harbours, wrong about the so-called “value gap”, and wrong to recommend an end to safe harbours that play a critical role in safeguarding the free speech rights of millions of Internet users.

Canadian Copyright and Safe Harbours

Mulholland and the industry spin a story of unfulfilled promises to artists from the 1990s that the digital environment – supported by legal rules creating statutory safe harbours for intermediaries – would lead to economic success for the creative class. The problem with the story is that it re-writes legislative history. In the U.S., the pressure for copyright reform in the 1990s that led to the Digital Millennium Copyright Act came from the music and movie industries, not the intermediaries (there was no Google or Facebook at the time). The resulting DMCA codified digital lock rules (anti-circumvention legislation) that U.S. officials acknowledged went far beyond those required in the WIPO Internet Treaties. It was the music and movie industries who claimed the legislation featuring legal protection for digital locks would support creators in the digital environment.

The inclusion of safe harbours within the legislation was a compromise that granted rights holders unprecedented power to encourage the removal of alleged infringing content without court oversight. At the heart of the U.S. notice-and-takedown system is the ability for rights holder to effectively require the removal of content based only unproven allegations of infringement. There is no court review or other independent analysis. The system grants intermediaries protection for liability if the content is removed, a legal condition that encourages taking down content without an independent review. As a result, there have been cases of misuse of the takedown system, including recent revelations that nearly all takedown requests for Google search results are fake.

Even if you believe that the U.S. system is somehow unfair, the notice-and-takedown system was never implemented in Canada. The DMCA-style issues, including digital lock rules and intermediary liability, were only addressed in legislation in 2012.  By then, the music industry argued that the essential reform was anti-circumvention laws. After the law was passed, the industry still did not lobby on safe harbours, choosing instead to engage in a major lobby campaign to extend the term of protection for sound recordings in an effort to keep public domain Beatles records out of the Canadian market.

To this day, there is still no formal notice-and-takedown system in Canada. The Supreme Court of Canada ruled on ISP liability in 2004 in SOCAN v. CAIP, but that decision was not based on digital copyright reforms. The 2012 reforms include some safe harbours, but not before the industry and artists received the right to forward an unlimited number of notices to Internet users at no cost through the notice-and-notice rules, a new enabler provision to make it easier to target piracy websites, and the restrictive digital lock rules. In other words, there is no notice-and-takedown system to amend in Canada and calls to end safe harbours for technology companies bears little resemblance to Canadian law.

The “Value Gap”

The global music industry has been focused on the so-called “value gap” (the amount paid for Youtube streams vs. streams on subscription services) for months, but there is no compelling case for legislative change in Canada. As noted above, the industry is experiencing record streaming revenues in Canada. For example, SOCAN reports that Internet streaming revenues increased more than 460 percent last year. Meanwhile, IFPI reported last month that music revenues rose 12.8% in 2016 in Canada, far ahead of most other countries. The growth was led by digital revenues, which now comprise 63% of recorded music revenues with streaming revenues more than doubling in Canada last year.

Meanwhile, Youtube may pay lower rates than subscription-based services such as Spotify, but it also offers Content ID, a free service that provides rights holders with greater control over their works, including the ability to have them removed or to monetize their videos. Google-commissioned research highlights many of the benefits of the service, including music discovery and reduced piracy. Further, there are labels and other businesses that point to the revenue potential from Youtube.

The disagreement over royalty rates (echoed with Music Canada’s anger over the Copyright Board’s Tariff 8 decision, in which the industry also argued that the rates determined by the independent tribunal were “too low”) is fundamentally a matter of negotiation. Google has more leverage than a company like Spotify and can be expected to negotiate better rates. Its service is based on ad-revenues, not paid subscriptions and the different business model understandably leads to different royalties. Moreover, music is all that Spotify offers. Youtube, on the other hand, has an unlimited array of video choices of which music is only a part. From a value perspective, it is easy to see why music would carry less value for Youtube than for Spotify and why it would generate lower streaming rates.

The Importance of Safe Harbours

If this were nothing more than a desire to renegotiate a commercial licensing agreement or even pressure on an Internet giant to pay more royalties, the issue would not be of great concern to the general public. However, when Mulholland and the industry argue for an end to tech company safe harbours, they are effectively arguing for an end to services that billions rely upon every day. The removal of safe harbours – relied upon by everyone from Wikipedia to the Internet Archive – would instantly result in the removal of a massive amount of legitimate content, increase surveillance or content filtering of website activity, create a huge burden on new, innovative companies, and curtail freedom of expression.

Consider online videos that many may have watched this week. It might be a clip of U.S. President Donald Trump in Europe, some sports clips from the NHL playoffs, a video of memorial events in Manchester, a user generated piece featuring remix of music and home videos, or a video from a concert. If Youtube or any other site were to lose safe harbour protections, they would likely filter each video to determine whether there was a risk of infringing content. Each of these videos would likely trigger a warning of potential infringement and would be blocked from the service. While each might be qualify as fair use (in the U.S.) or fair dealing (in Canada), the absence of a safe harbour and huge potential liability would likely lead to blocking the content.

Moreover, the impact would not be limited to videos: Wikipedia would have to actively monitor new contributions for potential infringement and scrape its current site for possible offside content, photo sharing sites such as Flickr would be forced to block millions of uploads, the Internet Archive and other online libraries would face closure, and social media services such as Facebook, Twitter, and Snapchat would begin the process of widespread content removal and monitoring. The impact would be felt not only by the big players and their millions of users, but smaller sites – including many artist-focused music and video sites – who would be forced to re-evaluate their businesses due to increased risks of legal liability.

In addition to taking down content, an end to tech company safe harbours would mean increased surveillance of platform usage with upload monitoring software designed to stop potentially infringing content from appearing on the site. Start-up and smaller companies would be unable to afford such solutions, further entrenching the large, dominant players in the market. The loss of safe harbours would ultimately have an enormous impact on freedom of expression curtailing the ability to freely post legitimate content online on many sites.

Mulholland is an articulate spokesperson for artists who highlights some of the economic challenges of her profession. Her ideas for next steps for consumers, labels and artists are fresh and deserve attention. Yet once she moves to digital policy and legal reforms, the debate over compensation for artists online should account for data from the industry that points to huge revenue gains from streaming. Further, her claims regarding safe harbours and notice-and-takedown are an inaccurate portrayal of legal developments over the past 20 years both at home and abroad and the proposal to end those safe harbours would create enormous harm for millions of people.

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